Ben Bernanke, the head of the US Federal Reserve, yesterday rejected suggestions that the central banks policies of deficit spending and printing moneyt are to blame for the rise in global food prices and commodity to record highs that have contributed to political unrest in Egypt and other developing nations.
Little Nicky Machiavelli was warning of food price inflation before Obama was elected so the guys at the Federal Exchange are part right at least.
Mr Bernanke said the rapid rise in living standards in developing economies was behind the increase in food prices, rather than the Feds much criticized decision to embark on a second, $600bn (£371bn) round of quantitative easing (effectively printing money by buying in its own bonds). Clearly whats happening is not a dollar effect, its a growth effect, Mr Bernanke said in a question and answer session with journalists at the National Press Club in Washington on Thursday.
Well he would say that wouldn’t he?
He is completely wrong of course. By printing money the Obama administration is deliberately trying to recuce the burden of debt their loonyoons public spending programmes have incurred. That is not working however as creditor nations are driving down the value of their currency in parallel with the sinking dollar. The net effect of this is to keep currency exchange rates fairly stable while causing prices of commodities to rocket.
The United Nations Food and Agriculture Organization (UN FAO) has warned that high prices for staple foods and essential minerals, already above levels in 2008 which sparked riots, were likely to rise further.
The FAO measures food prices from an index made up of a basket of key commodities such as wheat, milk, oil and sugar, and is widely watched by economists and politicians around the world as the first …
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